This may be the end of a 25-year run for stainless steel kitchen appliances.

Stainless has been the big word in kitchen appliances for years … in part because it’s durable and versatile.

But, there is a growing sense that stainless steel’s popularity is running into overtime … that it has outworn its welcome

What’s next?

Major manufacturers are placing bets on different potential successors to the shiny, upscale appliance finish

Whirlpool — the world’s largest home-appliance maker — says “White is the new stainless.”

Upscale Wolf Appliance says “Black is the new stainless steel.”

GE is betting on a metallic matte finish it calls “slate.”

Figuring that cost-conscious consumers aren’t likely to replace all their appliances at once, GE’s new finish complements the stainless steel, white or black appliances already found in consumers’ kitchens.

“Not every consumer is ready to completely change out their kitchen appliances … They don’t see the need to swap that expensive range they bought a year ago.”

Ken’s Take: I’ve oft told Mrs. H. that if we waited long enough, our appliances would be back “in” … I feel vindicated.

Architecture and design studio Kawamura-Ganjavian has announced the innovative Ostrich Pillow – essentially a combination pillow & hat that lets would- be nappers kick back or plop down wherever they may be.

The pillow features holes for your head and hands, and “has been designed to allow you to create a little private space within a public one.”

Absolut Vodka recently launched ‘Absolut Unique,’ a project in which the vodka makers will release 4 million limited-edition, unique bottles.

The project required a company’s production plant to be completely re-engineered; the ‘carefully orchestrated randomness’ to the bottle design involves using complex pattern programming alongside splash guns and color-generating machines to ensure that no two bottles come out the same.

The vodka bottles will be individually numbered and will be distributed globally in 80 markets.

“Absolut Unique feels a bit mad scientist, a bit street art. When the bottles first appeared on the conveyer belt, we cheered. By that point the production line looked more like an artist’s studio than a bottle factory.”

Take a look at this video for a behind-the-scenes look at the process.

Punch line: adidas is under fire after debuting an athletic shoe that contains rubber ankle shackles. adidas calls the shoe quirky and lighthearted, but consumers liken the shoe to slavery shackles. Despite initially defending the shoe, adidas has pulled the shoe from the Fall/Winter 2012 line, bowing to the power of consumers.

adidas is under fire after posting a picture of its upcoming JS Roundhouse Mids on the adidas Originals Facebook page, designed by Jeremy Scott.

It’s not the colors or name that’s offending, but the rubber shackles attached to them that remind some observers (such as the Rev. Jesse Jackson) of the ankle chains that imprisoned African American slaves. That the “adidas” name is also part of the “shackles” is raising hackles (and heckles).

Even so, the brand defended the design and the designer. “Jeremy Scott is renowned as a designer whose style is quirky and lighthearted … Any suggestion that this is linked to slavery is untruthful.”

Nevertheless, despite initially defending the designer, adidas is pulling the shoe, stating: “We apologize if people are offended by the design and we are withdrawing our plans to make them available in the marketplace.”

Punch line: Dollar Shave Club is to shaving what Netflix is to renting movies. A disruptive business model and innovative launch in the digital space have made Dollar Shave Club a threat to the big wig razor brands who are still calling an additional blade innovation (see the Flashback link below for a view on blades’ innovation)

… Dollar Shave Club, a disruptive idea … turns the expensive and drab process of buying men’s razors into a Netflix’s-like business model. For a set low-price per month, DSC sends members new high quality razors.

What makes Dollar Shave Club so unique is how it was launched. In March, DSC posted a video written by and starring company founder Mike Dublin. In going after personal hygiene giants like Gillette and Schick, Dublin had to get people’s attention out of the gate. His opening line – and every line thereafter – captured attention and have racked up 5 million views.

After the video went viral, Dublin was featured in scores of mainstream news and business reports. So great was demand that DSC had to delay adding new members for weeks while it increased support capacity … This a great example of excellent marketing that came at a low cost and high returns.

Solution providers often see marketing as an expensive proposition only big vendors can afford. Even when they do engage in marketing, the products are rather stiff and unimaginative, which leads to unfulfilled expectations.

Other examples of companies who have taken advantage of viral marketing: Microsoft’s “Smoked by Window’s Phone” and CalNet’s Wally Cleaver videos. So before you dismiss the notion of marketing – viral, video or otherwise – think about what Dollar Shave Club, Microsoft and CalNet did. A little creativity can go a long way.

… Recently, psfk.com interviewed Ryan Jacoby – who helps clients incubate new businesses, design new offerings, and craft innovation strategies at IDEO.. We asked him to explain how a company or an individual can increase their ‘innovation leverage:’

Scaling innovation often means enabling hundreds or even thousands of individuals within an organization to become more productive participants in the innovation process. While a lofty goal, most organizations aren’t going to transform an organization without years of work and significant investment.

There are thriving communities and partners out there actively innovating right now. The trick is to tap into that activity. Rather than focusing efforts exclusively on scaling innovation, for some companies I recommend organizations find quick and concrete ways to increase their Innovation Leverage.

Broadly speaking, you can increase your organization’s Innovation Leverage in two ways:

Extending your organization’s innovation reach: Opening up to a variety of collaborators—internal groups, customers, suppliers, stakeholders, and partners—extending your ecosystem in the process.

Leveraging your reach and newly formed relationships: Smartly utilizing that extended ecosystem, contributing to platforms, inviting collaboration, and doing more in the process with limited investment.

As the tools and networks evolve, it should get easier and easier to increase innovation leverage. The trick, as always is the case, is for innovators to get their organizations comfortable with the act of opening up and getting feedback on less-than-perfect ideas. The organizations that do will find a wealth of options for them to innovate more, with less.

Punch line: Remember when you’d secretly watching out-of-the-corner of your eye for that blinking red light? Yep, we all did it – and it even fed our egos of feeling somewhat important when we knew we had a message pending… Well, RIM, the makers of the “crackberry,” first dominated the marketplace but seem to have lost sight of its strengths, and customer needs. Now, it struggles for survival in the marketplace …

Consumer electronics success begins with excellent products. The BlackBerry was once perceived as the very best smartphone — or, at least, “emailing phone” — available. It was exciting, emotional and it made people feel good. RIM sold BlackBerries on the strength of word-of-mouth recommendations. BlackBerries were aspirational, and people wanted to own one because friends and colleagues were so passionate about them.

Now, fast-forward to today.

Consider the excitement and energy around the iPhone and all those Android handsets. RIM enjoys none of that today. Not one percent of it. In part, it’s because it stopped making good smartphones in favor of a poorly received tablet called the PlayBook.

Successful marketing begins with having a tremendous product or service to market. Nothing happens without this.

2. Build on Strengths Instead of Improving on Weaknesses

For RIM, the BlackBerry was a great strength, and they all but abandoned its development and marketing for a year or longer to create the tablet. RIM did this to try to prevent the world from passing it by in the tablet space — which it did anyway. Tragically, as a result of diverting talent, attention, resources, investment and innovation from the BlackBerry to the Playbook, the consumer smartphone world has also passed RIM by.

If you focus on developing weaknesses, your strengths will atrophy due to neglect.

3. Gravity Pushes Backwards

If you’ve attained a measure of success, you mustcontinue innovating your products, services and your marketing just to maintain your position. Because you can bet the competition is innovating aggressively, and they’ll pass you by in three seconds if you stop doing the things that brought you success. RIM not only stopped releasing new BlackBerries while focusing on its PlayBook, it basically stopped talking to its customers about them for an extended period.

Gravity pushes backwards in business. Consistent and aggressive innovation is required not only to attain success, but to maintain it.

4. Know Precisely Who Your Customer Is

RIM’s management famously disagreed on who their customer was. Then co-CEO Mike Lazaridis felt the customer was the corporation. Others, probably including his counterpart Jim Balsillie, wanted to aim BlackBerry products at consumers. If you don’t know exactly who your customer is, it is impossible to market. Language, messaging, platforms, branding and public relations change completely depending on the customers you target.

So identify your customers as precisely as possible, and aim all of your marketing efforts at them.

5. Executives Set the Marketing Tone

Consider the most successful companies in consumer electronics (and two of the most successful companies in all of business): Apple and Amazon. Their chief executives set their marketing tone, and everyone follows. If you haven’t seen it yet, watch this YouTube video of Steve Jobs introducing the iPad, and listen to how everybody who followed him on stage used exactly the same words.

This is no accident. The next day, thousands of articles used the same words to describe the amazing, remarkable and awesome iPad. Amazon’s Bezos is the same way. The best marketers have high-level executives setting the tone. They not only teach the rest of the company how to talk about their products and services, but the customers, the media, and the market itself. Obviously, RIM’s co-CEOs did not set this tone. They couldn’t even agree on who the customer was.

6. Avoid Unforced Errors

Most marketing problems are self-made and entirely avoidable. Consider the major developments from RIM’s recent past:

It voluntarily stopped focusing on the BlackBerry to make a product it had no experience with.

It could not identify its customer.

It stopped marketing to consumers, allowing competition to roar past.

7. Keep Talking to Your Customers

If RIM had talked to its customers like this, it would have quickly learned that they probably weren’t particularly interested in a BlackBerry tablet without built-in email, messaging or contacts!

If you’re not talking to your customers, you’re just guessing from a conference room.

The chain today begins selling three “gourmet” varieties — spinach and feta, bacon and jalapeno and cheese only — to replace its existing cheesy bread.

“In this economy, things are bad, people are cutting budgets,” said Domino’s CMO.

“The normal thing to do is raise prices and reduce quality. We’re making a purposeful effort to be on the side of consumers. We could take cheese out, but we put more cheese in and added more gourmet-type flavors.”

In this economy, “restaurant-goers are more demanding than ever, closely watching their food-service dollars and actively seeking the best overall value,” according to a recent Flavor Consumer Trend Report.

“In this way, flavor is more important than ever before.”

The report found that “more than two out of five consumers say they are more likely to try new flavors than they were a year ago, while 52% express a preference for restaurants that offer unique or original flavors, up from 42% of those polled two years ago.”

To protect its consumers from being branded as “dirty old men” or “floozies,” Norte Beer and agency Del Campo Nazca Saatchi & Saatchi recently handed out “intelligent beer coolers” throughout bars in Argentina.

The beer cooler is equipped with Photoblocker, a camera-flash sensor that triggers its own flash in response when a picture is being taken. The larger flash, in effect, destroys the picture. And the evidence.

There is no statistically significant relationship between financial performance and innovation spending, in terms of either total R&D dollars or R&D as a percentage of revenues.

Many companies — notably, Apple — consistently underspend their peers on R&D investments while outperforming them on a broad range of measures of corporate success, such as revenue growth, profit growth, margins, and total shareholder return.

Meanwhile, entire industries, such as pharmaceuticals, continue to devote relatively large shares of their resources to innovation, yet end up with much less to show for it than they — and their shareholders — might hope for.

In the cloud-filled U.K., children are apparently getting less sunshine than ever before as they spend more time inside.

Kellogg with plans to fortify Rice Krispies, Coco Pops and other cereals in the U.K. with vitamin D, touting the addition of the “sunshine nutrient” as a way to combat rising incidents of rickets.

The company will boost its entire kids cereal line-up with vitamin D by the end of the year. Kellogg already put vitamin D in Corn Flakes, marking it with a brightly colored label on the top of each box, including a message that vitamin D “Helps to Build Strong Bones.”

“Parents who are worried about the risks of sun exposure are failing to encourage their children to spend time outdoors in the sunlight with a third not getting enough sun exposure to give them sufficient vitamin D.”

UK health experts are calling attention to the nation’s rising vitamin D deficiency problem. “Children are also spending more time inside on the computer, with 29% playing outside less than twice a week.”

A report by consulting firm Booz & Co., says that few of the biggest R&D spenders crack the top 10 in terms of being considered “innovative” by their peers.

The most frequent pick for innovative was Apple — the 70th biggest research-and-development spender— followed by Google and 3M, also not among the top-20 spenders.

Health-care companies held four of the five top-spender spots, but none made the top 10 in terms of being deemed innovative.

Pfizer, which ranked second for R&D spending in the study and 16th for innovation, has for the past few years tried to spur creativity by inviting researchers to attend commercial meetings and encouraging employees on the commercial side to attend scientific reviews. The company also plans to cut its R&D budget, currently over $8 billion, to as low as $6.5 billion as it focuses on fewer, targeted disease areas.

3M, which spends relatively little money on its research and development, landing at number 86 on Booz’s spending list, allows employees to spend 15% of their time exploring side projects. It also offers seed “grants” to encourage innovation.

Dave’s Hot ‘N Juicy, named after late Wendy’s founder Dave Thomas, is Wendy’s new burger — with extra cheese, a thicker beef patty, a buttered bun, and no mustard, among other changes …

“Our food was already good. We wanted it to be better. Isn’t that what long-term brands do? They reinvent themselves.”

Wendy’s started Project Gold Hamburger two and a half years ago to boost lackluster sales and fight growing competition from McDonald’s and expanding fast-casual chains, such as Five Guys …

But the biggest issue was that Wendy’s, which hadn’t changed its burger since the chain began in 1969, let its food offerings get stale over the years while its competitors continued to update their menus …

“We have a lot of catching up to do in some areas. But after we launch this hamburger there will be folks who need to catch up to us.”

Wendy’s polled more than 10,000 people about their likes and dislikes in hamburgers. It found that people like the food at Wendy’s but thought the brand hadn’t kept up with the times.

So, executives were shipped off to eat at burger joints around the country and measured each sandwich on characteristics like fatty flavor, salty flavor and whether the bun fell apart.

Then, it was time for Wendy’s researchers to consider the chain’s own burger, ingredient by ingredient. Each time they made a change, they asked for feedback, visiting research firms around the country to watch through two-way mirrors as people tried each variation.

Many suggestions sounded good but didn’t ring true with tasters.

They tried green-leaf lettuce, but people preferred to keep iceberg for its crunchiness.

They thought about making the tomato slices thicker but decided they didn’t want to ask franchisees to buy new slicing equipment.

They even tested a round burger, a trial that was practically anathema to a company that’s made its name on square burgers.

Wendy’s ultimately did not go with the round shape, but changed the patty to a “natural square,” with wavy edges, because tasters said the straight edges looked processed.

Tasters said they wanted a thicker burger, so Wendy’s started packing the meat more loosely, trained grill cooks to press down on the patties two times instead of eight, and printed “Handle Like Eggs” on the boxes that the hamburger patties were shipped in so they wouldn’t get smashed.

Wendy’s researchers knew that customers wanted warmer and crunchier buns, so they decided that buttering them and then putting them through a toaster was the way to go.

In the end, Wendy’s researchers changed everything but the ketchup. They switched to whole-fat mayonnaise, nixed the mustard, and cut down on the pickles and onions, all to emphasize the flavor of the beef.

They also started storing the cheese at higher temperatures so it would melt better, … a change that required federal approval.

Wendy’s faces the reality that some customers may not like the new burger — or its likely price increase of 10 or 20 cents, because of the higher-quality ingredients.

There is a recent wave of ultra-low calorie products — such as, Artic Zero’s 150-calorie per pint dessert Artic Zero, 20 calorie per serving Tofu Noodles, and MGD 64, a 64 calorie beer — are aimed to direct appeal to our national sense of gluttony …

“What we’re seeing here is a strategy that says Americans like to stuff their faces … And these mean we don’t have to sacrifice.”

“It’s fine to eat one serving of ice cream, but I can’t remember the last time I sat down with a pint and ate half a cup,” said the CEO of Arctic Zero., whose pints of “ice cream replacement” prominently feature the 150-calorie message. “We feel like a serving is an entire pint.”

Tofu Shirataki noodles from House Foods America., offers two 20-calorie servings per 8-ounce package, but “most people eat the whole bag for a meal,” said Yoko Difrancia, the company’s marketing supervisor. “The whole bag is more realistic.”

Consumers seem to be buying it. Sales of Arctic Zero, introduced in 2009, have grown 15 to 20 percent per month for the past 18 months … ‘

“The idea is not that you can or should eat a much bigger volume than you typically
do,” Penn State Professor Barbara Rolls said. “It’s that if you eat your usual amount, you’re going to feel full but with fewer calories.”

… Health advocates and dietitians remain committed to the idea that portion sizes must come down. But they say these products could offer baby steps to people struggling to control their weight. They might also be useful when you feel that binge coming on …

Joel Ewanick was recruited as General Motors from Hyundai with expectations he would become a game-changer last year, positioning his new employer for long-term global success for its remaining brands.

But the GM CMO doesn’t think some of the advertising agencies that are supposed to help him are up to game speed yet. And he’s getting impatient.

No wonder Ewanick is a little edgy these days about the two brands.

Chevrolet has gotten stronger since his arrival, but a huge reason for that is one single new product: the Chevrolet Cruze small car, whose appeal seems based on fuel efficiency and strong vehicle features rather than buzz-worthy advertising.

Outsiders expressed concern last year with the brand’s new “Chevy Runs Deep” positioning. It wasn’t clear exactly what that message would do for the brand.

Meanwhile, Cadillac has been losing shine in the luxury-car war … and Caddy’s current “Red Blooded Luxury” campaign has been questioned.

Ken’s Take: My constant refrain to students is that marketing is more than advertising and promotion.

So, I cringed when I read the line “but … success is due to fuel efficiency and strong product features rather than buzz-worthy advertising”. Emphasis on the “but”.

Horrors.

Success from delivering a good product rather than smoke & mirrowing a bad one.

Somebody, please tell GM that marketing is more than advertising & promotion,

Unilever’s new angle on selling deodorant to women is a product that claims to make underarms not only odor-free but prettier.

Dove Ultimate Go Sleeveless, which hits U.S. stores this week, claims its formula of specialized moisturizers will give women better-looking underarms in five days.

UGS was inspired by Unilever research that found 93% of women consider their armpits unattractive.

Magazines and talk shows pour out the tips on how women can improve plenty of body parts, from legs to midriffs to fingernails. But little attention — or advice — has been brought to armpits.

Some 62% of the women surveyed said they suffer underarm skin problems like breakouts, discoloration or itchiness, according to research at Unilever. Nearly half said they have been embarrassed enough by the condition of their underarms that they have changed clothes.

Promoting a problem that consumers don’t necessarily realize they have is a frequently used but risky approach.

“Any marketer has to be careful of appearing to create a problem that doesn’t really exist … You can suffer a backlash if you do that.”

Dr Pepper doesn’t want there to be any confusion. Its new 10-calorie soda is simply “Not for Women.”

Dr Pepper Ten, … targeting men, a bold move in a category that has had its fair share of marketing missteps. Coke Zero and Pepsi Max, …had difficulty nailing down the right message for a diet product that’s meant to appeal to men.

Aware of those missteps, Dr Pepper is rolling out an extensive test campaign for the new product, its packaging and marketing. Dave Fleming, director-marketing at Dr Pepper, called the test, which runs from now through June, “elaborate,” saying the strategy is atypical for the company, …

Dr Pepper Ten was created for 25- to 34-year-old men who prefer regular Dr Pepper but want fewer calories. And its inclusion of 10 calories, rather than zero like its competitors, allowed it to deliver a flavor closer to the regular version…

“We have a lot of excitement about this and wanted to give it fair treatment, so it would resemble a national launch in test markets,” he said. “We want to make sure that, if we do take this national, we understand all the variables.”

To that end, Dr Pepper Ten will be trotted out with commercials … A mobile “Man Cave” will also travel to each of six test markets, …The branded trailer will set up in “testosterone zones” such as ball fields or car shows and give men a place to watch TV and play video games. …

The packaging and marketing are both heavy on masculinity, but also clearly state the brand proposition, …

Mr. Fleming said he’s not out to alienate women, … “But we did the research, and it scored well with men and women.”

In theory, so-called mid-calorie sodas will appeal equally to men and women, with a sweet spot among 25- to 34-year-olds, said Bill Pecoriello, CEO of Consumer Edge Research. But he points out that Dr Pepper Ten is clearly intended to appeal to the target market staked out by Coke Zero and Pepsi Max. …

Mid-calorie sodas such as Dr Pepper Ten could be just the boost the struggling soft-drink category needs, as consumers look to trim calories from their diets and health advocates blame the fizzy drinks for obesity and diabetes. …some in the industry believe this in-between category could appeal to consumers, …”The performance we’re seeing from brands like Coke Zero, Diet Mtn Dew and Diet Dr Pepper indicates that diets and perhaps mid-cals may be the future route to growth for the soda category.”

In my marketing strategy class, we were chatting about product life cycles, and I commented that being the ‘last guy standing’ in a declining market can be a profitable position since the last guy is by definition a monopolist, and momopolists are positioned to make beaucoup d’argent — that is, lots of money.

A student pointed out that might be true … until the declining market just flat out dies.

Good point … supported by an interesting story about the end of a photography era and an iconic brand:

A sign on the wall reads: “I took this to a drugstore and they didn’t even know what it was”.

Dwayne’s Photo, a small family business has through luck and persistence become the last processor in the world of Kodachrome, the first successful color film and still the most beloved.

Kodachrome … is noteworthy in no small part for how long it survived.

Created in 1935, Kodachrome was an instant hit as the first film to effectively render color.

Even when it stopped being the default film for chronicling everyday life — thanks in part to the move to prints from slides — it continued to be the film of choice for many hobbyists.

That celebrated 75-year run from mainstream to niche photography is scheduled to come to an end on Thursday when the last processing machine is shut down at Swayne’s — to be sold for scrap.

Kodachrome rewarded generations of skilled users with a richness of color and a unique treatment of light that many photographers described as incomparable even as they shifted to digital cameras.

Kodak stopped producing the film last year.

At the peak, there were about 25 labs worldwide that processed Kodachrome. That number got winnowed down to one – Dwayne’s.

Last year, Kodak stopped producing the chemicals needed to develop the film.

The last frame of the last roll to be processed: a picture of all Dwayne’s employees standing in front of the store wearing shirts with the epitaph: “The best slide and movie film in history is now officially retired. Kodachrome: 1935-2010.”

When the North American International Auto Show opens in Detroit on Friday, there’s going to be electricity in the air. …

… the star of the show is the Chevy Volt, the electric car with a backup gas engine. It won the top prize — the 2011 North American Car of the Year. …

GM has high hopes that the Volt will be adopted by a mainstream audience.

“Today a lot of our customers are early tech adopters — typically the first on the block to have an iPhone or an iPad,” says Tony DiSalle, the head of marketing for the Chevy Volt. He thinks those numbers will improve over time.

“The most important thing is to get consumers — mass-market consumers — to understand the benefits of the Volt,” DiSalle says.

GM expects to sell about 10,000 Volts this year. In 2012, the company will ramp up production to about 45,000 cars. But even that figure is small compared with the more than 2.2 million cars and trucks that GM’s four brands sold in 2010. …

One of the barriers to the adoption of the electric car is a phrase that keeps coming up at the auto show — range anxiety. Many of the cars on display can only travel under electric power for short ranges. Analysts say that until the big car companies can conquer consumer fears of running out of charge, electric vehicles will remain on the fringes.

“Look, the electrification of the American fleet is not going to happen overnight,” says Bob Lutz, who retired as vice chairman of GM in May.

… He says electrification will be a gradual process, predicting that it will take until 2025 for electric vehicles to account for 10 percent to 15 percent of the overall market. …

When the North American International Auto Show opens in Detroit on Friday, there’s going to be electricity in the air. …

… the star of the show is the Chevy Volt, the electric car with a backup gas engine. It won the top prize — the 2011 North American Car of the Year. …

GM has high hopes that the Volt will be adopted by a mainstream audience.

“Today a lot of our customers are early tech adopters — typically the first on the block to have an iPhone or an iPad,” says Tony DiSalle, the head of marketing for the Chevy Volt. He thinks those numbers will improve over time.

“The most important thing is to get consumers — mass-market consumers — to understand the benefits of the Volt,” DiSalle says.

GM expects to sell about 10,000 Volts this year. In 2012, the company will ramp up production to about 45,000 cars. But even that figure is small compared with the more than 2.2 million cars and trucks that GM’s four brands sold in 2010. …

One of the barriers to the adoption of the electric car is a phrase that keeps coming up at the auto show — range anxiety. Many of the cars on display can only travel under electric power for short ranges. Analysts say that until the big car companies can conquer consumer fears of running out of charge, electric vehicles will remain on the fringes.

“Look, the electrification of the American fleet is not going to happen overnight,” says Bob Lutz, who retired as vice chairman of GM in May.

… He says electrification will be a gradual process, predicting that it will take until 2025 for electric vehicles to account for 10 percent to 15 percent of the overall market. …

To come up with some new ideas, Mars implemented an innovation initiative.

The result – a new business unit making customized M&Ms.

* * * * *

Excerpted from Bloomberg Businessweek, “How Mars Built a Business,” by Jessie Scanlon, December 28, 2009

“There is little reason for an individual to have a computer in their home,” Ken Olsen, the president and founder of the Digital Equipment, famously said in 1977. As Olsen’s quote suggests, predicting demand for new, innovative products and services can be difficult, in part because many of the traditional methods of market testing—using historical data to forecast sales, for instance, or asking customers in a focus group to compare a new product with an existing, competing one—aren’t well-suited to the innovation process

This was the dilemma that Dan Michael, then R&D director for Mars‘ M&Ms brand, faced in 2000. He and his research team at the advanced R&D lab in Hackettstown, N.J., had an idea: to make customizable M&Ms printed with the word or image of a customer’s choosing. …

… Michael and team needed to convince management there could be a market for customized candies. To do that, they had to reinvent the development process—and the role of marketing within it.

Mars had recently launched an innovation initiative called Pioneer Week. Select research teams were given a modest budget and 90 days to build a trial production line, after which the new product would be made available to Mars’ 65,000 employees. “The teams were allowed to bypass some of the testing normally associated with product development,” says Marc Meyer, a professor at Northeastern University’s College of Business in Boston, who has studied the company. …

Setting the price was another challenge. For the internal launch, the team chose $12 a pound, $4 more than the retail price for standard M&Ms. Since then, according to Cass, the price has changed four or five times. …

Ready to take it to the next level, the team began selling My M&Ms, as the custom candies are now known, to the public through a small link from the main M&M Web site in March 2004. Without any marketing blitz, sales took off. That’s also when the team began to do more serious customer research. …

In 2006, Mars’ My M&Ms experiment became a formal business unit called Mars Direct. …

TakeAway:Dial hit it big in 2009 with Purex Complete 3-in-1, which combines detergent, fabric softener and an antistatic treatment in a single laundry sheet.

Now, for the new year, Dial is seeking to score a second success by bringing Purex Complete Crystals Softener to the United States. The softener is in crystal form, meant to replace liquids and sheets.

* * * * *

Excerpted from NYTimes, “Laundry Products Put Into Yet Another Form” By Stuart Elliott, January 5, 2011

The product is being billed as “a purer way to get laundry that smells clean and fresh for weeks.” It is making its way this month onto the shelves of American grocery, drug and mass-merchandise stores, priced around $4 to $7 for a 28-ounce package that can be used for 32 loads of laundry.

The campaign will include, in addition to television and print advertising, discount coupons, online ads, ads in stores and an extensive presence in social media. For instance, a group of so-called mom bloggers, whom Dial describes as Purex Insiders, have received samples of Purex Complete Crystals to write about on their blogs. To help sell consumers on the idea that Purex is more than just prosaic laundry products, the campaign for Purex Complete Crystals ends with a word, “Purextraordinary” that also appeared in the campaign to introduce the 3-in-1 laundry sheets. “The idea is that there would be a brand story of continual innovation,” said Dan Fietsam, chief creative officer at Energy BBDO, “a substantial innovation story in a category that isn’t known for a lot of innovation.” A commercial for Purex Complete Crystals plays up its distinctive differences, among them that the product is to be added to the washer with the laundry at the beginning of the wash cycle rather than placed in the dispenser for liquid softener.

“In this recession, we learned consumers are looking for value,” said Eric Schwartz, vice president for United States laundry care marketing at Dial, “but ‘value’ doesn’t mean just low price.” The word “value” can also mean “products that work differently.”

Dial tested the laundry sheets under names besides Purex, in case consumers said they associated the brand only with lower-price mainstay products like liquid detergent. But “we found our brand is more extendable than we expected,” Mr. Schwartz said, so 3-in-1 and Crystals are part of a new Purex Complete line. It can cost less to market a new product under a familiar brand name than to try to make shoppers aware of a name they have not heard before.

TakeAway: Some of today’s most common products became hits because their manufacturers, or in many cases ordinary consumers, noticed unplanned uses for them.

* * * * *

Excerpted from Forbes, “Inventions That Were Accidents” By Elaine Wong, December 23, 2010

They say that necessity is the mother of invention. But sometimes pure chance is.

Kellogg’s Corn Flakes came about when two brothers forgot to properly store wheat and then noticed that it came out as flakes when later processed. They soon applied the same procedure to other types of grain.

Procter & Gamble, which started as a candle- and soap-making company, discovered by chance that its Ivory soap could be made to float – a quality that somehow communicated “clean” to consumers – when an employee left the mixture for it churning and went to lunch. Air seeped in, but the resulting cakes of soap were shipped out anyway. Americans loved the new, floating cleanser.

Kleenex was originally developed for removing cold cream. Ernest Mahler, the head of research at Kimberly-Clark, had hay fever and started using the tissue as a disposable handkerchief. The consumer goods company then began advertising it as “the handkerchief you can throw away.” Sales doubled, and Kleenex went on to become, and remain, the world’s top facial tissue.

Sometimes, inventions arise in a moment of frustration or anger. That happened when George Crum, a restaurant cook, sliced up potatoes as thin as possible to serve to a customer displeased with the way his spud was cooked. The result was the world’s first potato chip.

TakeAway:In today’s mass production age, so many new products hit the shelves that most go unnoticed. Schneider Associates, a Boston-based public relations and market communications firm, compiles an annual list of the year’s most memorable new product launches. Here are the top ten to keep in mind.

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Excerpted from Forbes, “The Most Memorable Product Launches Of 2010” By Elaine Wong, December 3, 2010

This year Apple came in first with the introduction of its iPad tablet computer. Forty-two percent of consumers named it as one of the products they most remembered out of the flurry of new launches that came between October 2009 and September 2010.

Tech brands overall had a heavy presence, with new introductions, such as Microsoft’s Windows 7 (No. 2), Motorola’s Droid smartphone release (No. 4) and Samsung’s 3-D TV (No. 8) among the most recalled new offerings on consumers’ minds this year.

Sales aside, a product launch that’s effortlessly recalled by the public proves that marketers – and their brands – have staying power. Plus, with about 250,000 new products launched globally each year, creating one that stands out can be pretty tough. Consider, too, that the typical failure rate of new product launches can be anywhere in the 85% to 95% range, according to Mintel.

Rolling out a product that appeals to an audience that uses social media to chat about new things can help make it a hit. That’s what Kimberly-Clark did when it rolled out Huggies Little Movers Jeans (No. 9) this year. This limited-edition offering is a diaper with a denim-like style. Mommy bloggers loved them.

For some marketers, thumbing a nose at conventional wisdom can work. KFC did this by ripping the bun off its fat-soaked Double Down sandwich (tied for No. 10). That’s two pieces of chicken – fried or grilled – serving as the one and only cover between an indulgent bacon, cheese and secret sauce center combo.

Food companies, on the other hand, tapped into recession-weary consumers’ hunger for quick, cheap eats. Among the hits: McDonald’s Real Fruit Smoothies (No. 5) and Mars’ Pretzel M&Ms (No. 3). The latter was a simple spin on an idea, but it satisfied Americans’ craving for a sweet, simple treat in an economic downturn.

TakeAway: In a short period of time, HTC has risen from a nameless contract manufacturer to the world’s market leader in Android phones.

With Android sales growing faster than iPhone sales, HTC is well-positioned to grow even more.

Such a position has given HTC more clout, and more profits than it could ever earn as a brandless company.

* * * * *

Excerpted from Bloomberg Businessweek, “A Former No-Name from Taiwan Builds a Global Brand,” by Bruce Einhorn, October 28, 2010

…HTC, a brand virtually unknown in the U.S. two years ago, is the market leader in Android phones—the one segment of the market that’s growing faster than Apple’s iPhone. …

… with a market cap of 552 billion Taiwan dollars ($18 billion) the company is now the third-most-valuable Taiwanese technology company … HTC launched the first Android smartphone in 2008 … and has a 39 percent share of that market globally. Thanks to the success with Android … analysts expect sales to soar 78 percent this year, according to data compiled by Bloomberg. That’s far better than rivals Apple, Nokia, Research In Motion, and Samsung Electronics. …

HTC is an unlikely Android leader. When the company got its start in 1997, it manufactured personal digital assistants for Compaq. HTC followed the tried-and-true Taiwanese outsourcing formula of designing and manufacturing gadgets for other companies without a brand name of its own. … In 2002 … Microsoft awarded HTC a contract to make smartphones, and the manufacturer quickly became the world’s top producer of Windows phones. …

Even as the Microsoft business was growing, [the CEO] worried that a brandless HTC would forever remain a low-margin manufacturer of commodity products. … In 2007, the year Apple … [HTC] decided to move away from the anonymous contract-manufacturing business. Last year, HTC spent $100 million on a fourth-quarter marketing blitz, and … will spend up to $400 million this year. The company is now the world’s fourth-largest smartphone manufacturer after Nokia, RIM, and Apple, according to IDC.

HTC’s rise to the top tier of handset makers has given it more clout with partners … [and] wireless operators are more willing than before to work with HTC on technology and marketing plans. …

TakeAway:Wendy’s announced a national marketing plan for its new recipe for French fries, the biggest overhaul of its fries in 41 years.

Wendy’s CMO admitted fries “are something we hadn’t been a leader in, in the past.”

The $25 million campaign aims to educate consumers about Wendy’s new fries that it hopes will compete mightily against McDonald’s.

* * * * *

Excerpted from NYTimes, “Wendy’s Rethinks Fries in Nod to More Natural Foods” By Tanzina Vega, November 21, 2010

For the last year, the company has been examining its product line for opportunities to promote food made with more natural ingredients. Wendy’s “new natural-cut fries with sea salt” use Russet Burbank potatoes and are thinner and crisper than the current fries and will be unpeeled.

The idea is to provide an alternative to McDonald’s, which has long been the leader in French fry sales. The Wendy’s campaign includes two television spots that will run on cable and network stations such as TBS, VH1 and Bravo and during shows such as “Conan” and “Lopez Tonight.” The campaign includes two radio commercials that will air nationally, as well as billboards around the country to entice people to select Wendy’s when they get hungry.

The digital campaign includes the use of the Wendy’s Web site, a Twitter account, a Facebook fan page and digital banner ads. The company’s YouTube channel will feature an ad for the fries and the background of the Wendy’s Twitter account page will also feature art for the fries and a “Fry for All” app that lets users select a box of fries that they can post on their Facebook page so they can “share” fries with their friends. The idea of sharing is central to the campaign. “When something is really good, you don’t necessarily want to share it so easily,” said the chief executive and CEO of Wendy’s agency of record.

TakeAway: Hefty wants to cash in on evolving trash-can colors with BlackOut, a new line of black kitchen bags.

Hefty hopes they’ll bring new interest to one of the lowest-involvement categories.

The target is mainly “kitchen enthusiasts,” the 40% of people who see the kitchen as the heart of their home and enjoy cooking.

* * * * *

Excerpted from AdAge, “What the Stylish Garbage Can Is Wearing: Hefty in Black” By Jack Neff, November 3, 2010

Hefty discovered that consumers were buying more black and stainless-steel trash cans, which consumers say look better with black garbage bags. Hefty executives are among the first to admit it’s hard to get people thinking about trash bags. Private-label shares in the category stand among the highest in packaged goods at 39% for the year ended Oct. 3. Overall category sales were down 5% for the year, in part because some consumers turned to using bags from the groceries or other “free” alternatives.

But Hefty research found, given the right reasons, people actually do care about where they stash their trash. Color, surprisingly, is one of them. Today, most kitchen trash bags are white, stemming from a time when most kitchen appliances were white or shades of beige. That time has passed.

Product development started only eight months ago, when Hefty marketers discovered a seismic shift in trash-can and kitchen appliance colors thanks to its partnership with HMS Manufacturing, which licenses the Hefty name for kitchen trash cans. While nearly two-thirds of new kitchen trash cans are still white or tan, unit sales of black trash cans are up 38% from last year. Sales of stainless-steel cans are up 12%, while sales of the white/beige range are down 8%. This follows trends in kitchen appliances. While stainless steel is the bigger trend in appliances, black is a bigger deal in trash cans, primarily because black cans are less expensive than stainless steel or chrome. Consumers also find black bags look better with stainless steel than white ones, she said.

Hefty discovered trash also looks better, or at least less messy, in black bags. The black bag also appeals to consumers’ desire for privacy.

Apple’s iPad sold three million units in the first 80 days after its April release and its current sales rate is about 4.5 million units per quarter, according to Bernstein Research. This sales rate is blowing past the … the 350,000 units sold in the first year by the DVD player, the most quickly adopted non-phone electronic product. …

At this current rate, the iPad will pass gaming hardware and the cellular phone to become the 4th biggest consumer electronics category with estimated sales of more than $9 billion in the U.S. next year …

… Pete Najarian, co-founder of TradeMonster.com …. “It’s really a total media device and there’s not much a PC can do that you can’t do on an iPad.”

… It took five years for the DVD to reach the unit sales pace that the iPad reached in just its first quarter, according to Bernstein. The iPad had the advantage of being the extension of Apple’s ever-expanding ecosystem of iPhones, iPod touches and Macs that are marked by ease of use and a familiar style.

… not only are the iPads cannibalizing the netbook/notebook category in stores, but could also be hurting sales of TVs and digital cameras. …

Apple has been the rare company that keeps the “first mover” advantage. As tablets from Microsoft and Research-In-Motion soon flood the market, and Apple’s market capitalization approaches Exxon Mobil, the company’s going to need the next big extension of that ecosystem. Apple TV is on sale now.

TakeAway: By any measure Kenmore has been successful over a long period of time.

Even in today’s intensely competitive home appliance market, it has managed to stay on top across all major appliance categories.

Now, the brand is being overhauled in an effort to modernize.

With customer-focused innovations geared toward a new generation, including appliances that transmit data over a phone line in order to troubleshoot, the brand seems likely to stay on top for the foreseeable future.

There was a time in the annals of American retailing when Sears ruled the universe in both mail order and store sales. While that era is long gone, the venerable Kenmore brand, originally associated with Sears, has maintained its independent leadership position in household appliances.

First introduced on a laundry appliance in 1927 …The brand’s awareness factor is legendary. Today, more people in the United States buy Kenmore than any other appliance brand, one in every three American homes contains a Kenmore appliance, and Kenmore ranks number one or number two in every major appliance category.

… Even its rivals know the unshakeable power of the brand — Frigidaire, LG and Whirlpool all manufacture products that are sold under the Kenmore name.

But Kenmore has not rested on its laurels …

The trick, of course, is to modernize the brand while retaining and enhancing its long-standing reputation. … that involves four primary areas:

1. “Premium customer touch points,” such as higher quality handles and knobs that are both elegant and ergonomic.
2. “Premium technology,” including user-friendly interfaces such as color-touch LCD displays that are advanced but intuitive and easy to use.
3. Streamlined modern design.
4. New logo and custom font, as well as a new sound palette on select products.

… Kenmore announced an additional innovation called Kenmore Connect, a technology designed to speed up appliance repairs. Kenmore machines with problems have the ability to transmit data over a toll-free phone line for review by company representatives. …

Product design isn’t the only area getting a … makeover. … Kenmore launched an interactive “Kenmore Live Studio” in Chicago. The studio is equipped with cameras that broadcast video via the Internet and includes demonstrations by chefs, presentations, and unveilings of new products that can be shared in real time on the brand’s Facebook page. …

Obviously, Kenmore is making a concerted effort to gain relevancy with a whole new generation of consumers.Edit by DMG

TakeAway: By any measure Kenmore has been successful over a long period of time.

Even in today’s intensely competitive home appliance market, it has managed to stay on top across all major appliance categories.

Now, the brand is being overhauled in an effort to modernize.

With customer-focused innovations geared toward a new generation, including appliances that transmit data over a phone line in order to troubleshoot, the brand seems likely to stay on top for the foreseeable future.

There was a time in the annals of American retailing when Sears ruled the universe in both mail order and store sales. While that era is long gone, the venerable Kenmore brand, originally associated with Sears, has maintained its independent leadership position in household appliances.

First introduced on a laundry appliance in 1927 …The brand’s awareness factor is legendary. Today, more people in the United States buy Kenmore than any other appliance brand, one in every three American homes contains a Kenmore appliance, and Kenmore ranks number one or number two in every major appliance category.

… Even its rivals know the unshakeable power of the brand — Frigidaire, LG and Whirlpool all manufacture products that are sold under the Kenmore name.

But Kenmore has not rested on its laurels …

The trick, of course, is to modernize the brand while retaining and enhancing its long-standing reputation. … that involves four primary areas:

1. “Premium customer touch points,” such as higher quality handles and knobs that are both elegant and ergonomic.
2. “Premium technology,” including user-friendly interfaces such as color-touch LCD displays that are advanced but intuitive and easy to use.
3. Streamlined modern design.
4. New logo and custom font, as well as a new sound palette on select products.

… Kenmore announced an additional innovation called Kenmore Connect, a technology designed to speed up appliance repairs. Kenmore machines with problems have the ability to transmit data over a toll-free phone line for review by company representatives. …

Product design isn’t the only area getting a … makeover. … Kenmore launched an interactive “Kenmore Live Studio” in Chicago. The studio is equipped with cameras that broadcast video via the Internet and includes demonstrations by chefs, presentations, and unveilings of new products that can be shared in real time on the brand’s Facebook page. …

Obviously, Kenmore is making a concerted effort to gain relevancy with a whole new generation of consumers.Edit by DMG

What was the most successful European company of the 1990s? Easy: Nokia. The Finnish mobile-phone manufacturer captured the emerging market for mobile phones and built the industry’s most powerful brand. Its handsets virtually defined the industry from the time it launched its first GSM phone … in 1992. From 1996 to 2001 its revenues increased almost fivefold, and by 1998 it was the world’s biggest mobile manufacturer. In 2005 it sold its billionth handset …

Now, what’s the most disappointing company of the 2000s? Easy again: Nokia. The company has been in steep decline—a point underscored by its Sept. 10 announcement that it was hiring its first non-Finn as chief executive officer. …

Since Apple introduced its iPhone in January 2007, Nokia shares have fallen 49 percent. In a ranking of global brands by Millward Brown Optimor this year, Nokia was No. 43, having dropped 30 places in 12 months. …

Recognizing the scale of its challenges, Nokia hired Stephen Elop, the Canadian head of Microsoft’s business unit, to turn the company around. Everyone will wish him well. … if the guy knows so much about phones, he’s kept it a secret. Microsoft has never made any progress in that industry.

The cruel truth is that for all its residual market share, Nokia looks like a has-been. The company misread the way the mobile-phone industry was merging with computing and social networking. And it’s probably too late to turn that around.

There are uncomfortable lessons here. First, success is not a sinecure. Nokia got to the top of its industry quickly. Once there, it became complacent. … Nokia worried about hanging onto market share rather than creating innovative products that excite customers. Second, Nokia was unwilling to challenge itself. The company clung to the idea that handsets were mainly about calling people. It failed to notice that they were just as much about checking your e-mail, finding a good restaurant, and updating your Twitter page. …

TakeAway: Eight years ago, sportswear maker Under Armour learned that making smaller, pinker versions of its male apparel wouldn’t simply translate to women.

Women buy because a piece fits well and promises to help keep them cooler or drier.

Under Armour’s founder believes women’s apparel will one day surpass its men’s apparel, so learning what women wanted was key…the consumer always comes first!

* * * * *

Excerpted from New York Times, “Under Armour Wants to Dress Athletic Young Women” By Elizabeth Olson, August 31, 2010

Under Armour is aiming at the “team girl,” which Adrienne Lofton, head of Under Armour’s women’s apparel, defines as a female who is competitive and confident and who plays on high school or college sports teams, or who, after college, continues to work out regularly. “The team girl is tough, intense and passionate, and she creates her own style.”

In 2003, Under Armour began marketing a line of women’s wear designed by women. Even so, women’s apparel represents only about 25 percent of the company’s nearly $800 million in annual revenue, and it wants more. It is the only sports apparel sector where sales are forecast to grow, according to Marshal Cohen, an analyst for NPD Group, a market research group. Part of that is due to the marketing of active wear as street wear.

Under Armour’s newly designed line, with compression shorts, a sports bra, shorts, footwear and other training gear, is being introduced Wednesday with a campaign called “Protect This House I Will,” which builds on the company’s successful we’ll-tough-it-out-together theme that it started for its men’s gear.

Perhaps surprisingly, the 60-second television and digital spot anchoring the campaign features both male and female athletes — a choice, Mr. Battista said, shaped by focus-group research among high school and college women playing on sports teams. Women wanted to see themselves on par with men – as athletes, not “female athletes.”

For the campaign’s digital marketing, Under Armour is placing two- and three-minute segments it filmed of the three female athletes on a new Facebook site for women (which is not yet active) and on each athlete’s Web site. The digital portion of the campaign will appear on MTV.com, Facebook and other teenage-oriented outlets, video sites like Hulu and CW and the high school sports site MaxPreps. “We have been shifting more to digital,” the company’s Vice President for Brands said. “It is now 80 or 90 percent digital. Our customers are telling us they like to receive information online and prefer to shop online.”

Just finished reading two books that started with a similar observation – that products and brands are becoming commoditized — then prescribed radically different remedies.

In Outsmart the MBA Clones, Dan Herman argues MBA degree holders are all clones who studied the same materials, learned the same analytical techniques, and oversimplify everything. He suggests using nuanced research to differentiate your products “at the margin” – adding distinctive features to separate from competition.

That sounded OK to me until I read Different by HBS Prof Youngme Moon. She argues that companies are so focused on their competitors and competitive benchmarking that all competitors quickly converge on similarity, becoming “heterogeneously homogenized” – adding superfluous product benefits that are apparent only to category expects.

Her answer: don’t get mired in all of the tradition (and predictable) research methods. Step back and let your intuition (counter-intuition) drive big idea brands and products.

One of her notions: “reduced brands”. Stripping products of all but their potent and necessary features & benefits … and then adding back in some features or benefits that are unexpected.

Her poster child: IKEA … stripped out in-store service,and delivery, outsourced assembly to customers, and made no claims of quality or durability … but added back in the “personal journey” of finding the right product and the “personal fulfillment” of screwing the stuff together when you get it home.

So, should we be adding bells & whistles at the margin or stripping out the ones that are already there ?

Punch line: In an excerpt from Design Is How It Works, former BusinessWeek staff writer Jay Greene explores Lego’s troubles and its comeback.

* * * * *

Excerpted from: How LEGO Revived Its Brand, July 23, 2010

Not many toy companies in the world have more brand power than LEGO.

Three generations of kids have built cars, cities, and spaceships with LEGO’s iconic bricks. Its logo — the red square with the rounded white letters — is immediately identifiable to most of the developed world and to a bunch of developing nations as well.

Brand power opens doors, getting kids and parents alike to consider LEGO products. But if those products don’t engage them, kids will quickly move to the next toy.

It is sometimes forgotten that LEGO struggled mightily in the early to mid-2000s.

Back then, company executives believing “being LEGO allowed us to do anything” wanted to extend the brand, venturing off on wild forays into new product development.

The prototypical example: Galidor, a legendary bomb that was all about action figures that … were little different than toys offered by scores of other manufacturers. They didn’t require building skills or much in the way of imagination, the hallmark of the more traditional LEGO construction toys.

Worse still, LEGO branched into a whole new business about which it knew little. The company co-produced a kids’ TV show called Galidor: Defenders of the Outer Dimension. The story line was meant to add detail to the action figures, giving kids more reason to buy them. But the shows sparked little interest.

Within its core construction toy business, LEGO was foundering. LEGO managers had given designers free rein to come up with ever more imaginative creations. And they took it. Left to their own devices, designers conjured up increasingly complex models, many of which required the company to make new components — the various bricks, doors, helmets, and heads that come in a rainbow of colors and fill every LEGO box. The number of components exploded, climbing from about 7,000 to 12,400 in just seven years. Of course, supply costs went through the roof, too.

Even more troubling was that the new designs weren’t resonating with kids.

“We almost did innovation suicide. We didn’t do a lot of clever components. We did a lot of stylized pieces.”

LEGO had assumed it would flourish by giving its designers whatever pieces they asked for in order to unleash their creativity. Instead, costs soared as the models veered toward the esoteric.

But, just as design pushed LEGO to the precipice, it helped bring the company back.

But here’s the paradox: Instead of giving designers free rein to conjure up their most brilliant creations to save the company, LEGO tied their hands. Gone were the days when designers could go wherever their imaginations took them.

Instead of rubber-stamping nearly every request for a new component, LEGO put each one through a systematic screening process. And it eliminated rarely used pieces, slashing the total number of components to about 7,000, the same number as in 1997.

LEGO also forced designers to come out of their cocoons and work with noncreative staff. At the earliest stages of product development, marketing managers, who had detailed research on the types of products kids wanted, helped guide development. Manufacturingpersonnelweighed in on production costs before a prototype ever saw the light of day.

LEGO found that design thrives with some constraints.

That might send chills up the spines of some in the design world. The idea of fencing in designers, forcing them to play in a confined space, runs counter to the notion that design needs to be set free.

“If you put guiding principles in place, you empower people to make the right decision.”

Amazon reached a milestone, selling more e-books than hardbacks over the past three months. Over the past month, the Seattle retailer sold 180 Kindle books for every 100 hardcover books it sold, it said.

But publishers said it is still too early to gauge for the entire industry whether the growth of e-books is cannibalizing sales of paperback books, a huge and crucial market.

In a statement, Amazon’s chief executive, Jeff Bezos

countered the perception that sales of the company’s Kindle e-reading device had suffered due to competition from other devices, such as Apple’s iPad.

said the growth rate of Kindle device sales had “reached a tipping point,” having tripled since the company lowered its price

painted a picture of accelerating growth in sales of e-books, which can be read on the Kindle

Punch Line: To speed time-to-market, Quiznos employs rapid-fire taste tests that help it give customers what they want, sooner.

* * * * *

Excerpted from Bloomberg Business Week: Damn the Torpedoes! Getting Quiznos, January 14, 2010

Quiznos has always positioned itself as a cut above Subway in the fast-food market — and priced its sandwiches accordingly.

While restaurant operators regularly enlist consumers for feedback, many have turned away from traditional focus groups … to avoid the peril of group think from a methodology that some experts say is “a bit dated”.

Quiznos swear by a method called “speed-dining”. The company empanels as many as 25 groups in back-to-back, 90-minute tastings.

By reworking recipes based on snap reviews, Quiznos can get products from test kitchen to the market in six months … twice as fast as competitors.

Now Quiznos is gunning for upmarket consumers with two new subs priced at up to $7.49.

That may seem foolhardy, with unemployment at 10%. But Quiznos is confident.

TakeAway: After three years of declining sales, PepsiCo wants to regenerate the product life cycle by designing a three-step system for Gatorade consumption and targeting a niche market of elite athletes. Particularly after a failed makeover dubbing the drink “G” last year, PepsiCo needed to find a way to regain profits for a mature product.

*****

Excerpted from WSJ, “Gatorade: Before and After — PepsiCo’s New Ad Campaign Touts Three-Drink System for Sports Beverage” By Valerie Bauerlein, April 23, 2010

The campaign promoting the new lineup of “G Series” drinks for athletes, aims to demonstrate that Gatorade isn’t just a sports drink that replaces nutrients sweated out during the game, but a system with three steps: a carbohydrate-loaded “Prime” concentrated liquid before play; the traditional “Perform” sports drink during; and a light, protein-rich “Recover” drink after.

Gatorade’s basic “thirst quencher” message of hydration hasn’t changed much in 45 years. But PepsiCo wants the G Series to expand the Gatorade message to broader sports performance.

Teens are Gatorade’s main target. To create the G Series line, Gatorade interviewed more than 10,000 teen athletes, parents and coaches. Many said they already ate something with carbs before a game (candy, chips), a sports drink during and something with protein afterward (sandwiches).

The three products — Prime, Perform and Recover — together will cost about $7. A 20-ounce bottle of Gatorade costs about $2.

The company also plans to reach out to adult athletes. Gatorade is launching a separate new line next month called G Series Pro, aimed at marathon runners, personal trainers and other elite athletes. The products will be sold in specialty stores such as GNC and Dick’s Sporting Goods.

Gatorade is PepsiCo’s third-biggest selling global beverage brand after Pepsi-Cola and Mountain Dew, so its 14% sales volume decline in the U.S., its biggest market, last year was a concern for executives, analysts and investors.

PepsiCo’s first-quarter earnings, released Thursday, showed that the company has yet to turbo-charge Gatorade, although sales are improving. The company posted a 26% jump in first-quarter earnings, boosted by the February acquisition of its two biggest bottlers. While quarterly revenue in the company’s Pepsi Americas Beverages business, including North America and Latin America, rose 32%, beverage volumes fell 4%.

Coke is trying to boost its fountain business (in restaurants, etc.) by letting people add a shot of flavors to its drinks – kinda like Starbucks does.

Remember when Coke changed the basic formulation? Folks balked at New Coke.

So, let’s dink with flavors some more and confuse people re: what a Coke tastes like.

Might work … but I resisted headlining this “adding fizz to the soda biz”.

The soda business is in need of some innovation.

Sales volume in the U.S. has slipped steadily for the past five years, and fell 2.1% in 2009 to 9.42 billion cases.

Fountain sales, which make up about a quarter of soft-drink volume, slipped 2.7%.

Coca-Cola hopes a new high-tech soda fountain will add some life to listless soft-drink sales by letting restaurant-goers mix up 104 different drinks, creating inventions such as Caffeine-Free Diet Raspberry Coke.

Coke is the giant of the fountain business, with 70% of the U.S. market.

A key to Coke’s strategy is to sell more sodas when people are dining out, presumably with family and friends.

The Freestyle is a wireless device, capable of beaming back information that helps Coke realize that sales of non-caffeinated drinks skyrocket after 3 p.m., or that a particular restaurant will need a concentrate shipment by the next week, based on usage patterns.

Although Coke is charging more for a Freestyle machine than for a traditional soda fountain, the company expects restaurants will ultimately raise the price of a drink by about 10 cents.

As Apple, RIM, and Google race to make the smartest phones, LG hopes to connect with customers looking for simplicity and style.

Though smart phone usage has grown exponentially, these devices capture less than 20 percent of all US cell phone users.

LG believes there is tremendous opportunity in focusing on the larger portion of the overall market. LG’s strategy also reduces dollars required for R&D that can instead be redirected to design, branding, and…oh yeah, shareholders.

Will LG prove that less is more? Or, will the market develop to expected more and drop LG’s call?* * * * *

Even as Apple promises new features for the iPhone, the industry anticipates the iPhone’s arrival on Verizon and Palm retools its marketing strategy, LG and Sprint are starting a campaign aiming for the vast swath of consumers still choosing among simpler phones largely on the question of style.

The campaign and an accompanying MTV miniseries called “LG Fashion Touch” pair two LG phones being introduced April 19, the Lotus Elite and Rumor Touch, with Victoria Beckham and Eva Longoria Parker, respectively. The Lotus Elite is an edgier, more colorful flip phone that suits Ms. Beckham’s bombshell look, while the Lotus Elite is a more sleek, classic phone that complements Ms. Longoria Parker’s daily style.

The smartphone wars still don’t apply to a large group of women, said a VP of marketing and innovation at LG.

“Although there’s a large percentage of consumers going to smartphones, there’s still another segment who are saying, ‘I want phones that reflect my personal style’ without all the bells and whistles of a smartphone.”

Takeaway: For years, the makers of men’s razors have focused on improving their products’ engineering specs, namely by adding blades. Shick has finally broken this cycle of one-upmanship by focusing on the needs of their customers, which center around comfort.

However, in making this potentially breakthrough move, Shick has awakened a giant. P&G’s Gillette will be quick to follow with a relaunched Fusion razor aimed to address the same needs as Shick’s product.

Will Shick’s launch provide the company with a first-mover advantage in comfort positioning? Or, will Gillette’s brand recognition, enormous advertising support, and best-in-class distribution system leave Shick all cut up?

* * * * *Excerpt from New York Times, “New Razors Place Focus on Comfort, Not Blade Count” by Andrew Adam Newman, April 18, 2010.

When Gillette introduced the first three-bladed razor in the United States in 1998, it struck some as absurd, and “Saturday Night Live” at the time pitched a 14-blade razor in a parody commercial. But blade escalation continued: Rival Schick introduced the four-bladed Quattro in 2003, and Gillette struck back with the five-bladed Fusion in 2005.

Schick is introducing a new razor, the Hydro, however, and this time it is not raising the blade ante. The new razor is available in both five- and three-blade versions, and advertising focuses less on blades than how a moisturizing gadget reduces irritation.

New television commercials show men getting an unexpected splash from a boxing glove or a soccer ball exploding like a water balloon, drenching the player.

“As you continue to add more blades, there are diminishing returns because more and more blades make a bigger cartridge and that makes it hard to shave in all the nooks and crannies on your face,” said a Schick brand manager. “So instead of more blades, we’re providing a more lubricious, smoother, more comfortable shave.”

The razor replaces the moisturizing strip on the razor’s head with a gel reservoir that exudes aloe and vitamin E.

“It’s by far the biggest launch we’ve ever done, our largest capital commitment for R.& D. and marketing, and by far the best technology we’ve ever come up with,” said a company representative.

Schick, which was bought by Energizer in 2003, is dwarfed in the razor category by Gillette, a Procter & Gamble brand. Gillette has 66 percent and Schick has 25 percent of the nondisposable razor segment. In the $781 million replacement cartridge segment, Gillette commands an 83 percent share, compared with 14 percent for Schick.

“In brand marketing, when you do something and it works, you keep doing it until it stops working, and that’s what it felt like was happening when companies went from one to three to five blades,” said marketing professor at New York University. “They added so many blades that they have unwanted effects, like more irritation. It was absurd, frankly, and it got to be a marketing gimmick.”

While razor makers tend to stress technological advances and performance, which can make razors seem more like racecars, the new Schick campaign focuses more on how it treats skin.

Schick says its internal research found that only 30 percent of men shaved five or more times a week. The company is publicizing a poll it commissioned which found, conveniently enough, that men who shave five or more times a week have sex twice as frequently as the stubbly, and that 82 percent of women prefer cleanly shaven men.

Gillette, meanwhile, will introduce a razor in June that, rather than add another blade, similarly promises to make shaving with five blades less irritating. The Fusion ProGlide, as its name makes clear, will not be an entirely new razor, but rather an extension of Fusion, a brand that Procter & Gamble reports grew faster than any other in its history, earning $1 billion within two years of its introduction.

“If you’re going to address comfort, the place to start is not by adding blades but rather to work on the engineering of the blades themselves,” said Stew Taub, associate director of male premium systems at Gillette.

The ProGlide makes seven comfort-related improvements to the Fusion, including using thinner blades with improved friction-reducing coating. The company also will introduce a preshave facial scrub that causes a warming sensation, as well as a postshave cooling lotion under the ProGlide label.

“Consumers vote with their purchases and have overwhelmingly said Fusion is best, and we’ve chosen to take it up a notch,” said a Gillette spokesman.

Mr. Jones said the innovations in the ProGlide had been in development for years. But some industry analysts think Gillette is rushing a comfort-driven product to market to steal Schick’s thunder.

“It looks like a fairly quick and defensive move on Gillette’s part,” a marketing professor at NYU said. “For me the big news is that Schick, after being almost an afterthought in the category for many years, has staked out some smart territory, and is acting like a real brand marketing company.”